Adoption Credit & Exclusion

A taxpayer can claim a credit of up to $16,810 and also exclude up to $16,810. of employer-provided benefits from income for expenses of adopting an eligible child. The same qualifying expenses cannot be used for both. An attempt that leads to adoption and any unsuccessful attempt to adopt a different child is treated as one effort. Unmarried persons who adopt a child can divide each limit any way they agree. Phaseout is between $252,151 to $292,150. Over $292,150 there is no adoption credit or exclusion allowed. Taxpayers who paid qualified expenses to adopt a US child and the attempt was not successful, treat these expenses in the same manner as expenses paid for adoptions not final by the end of the year. For an adoption of a foreign child the adoption credit and exclusion may not be taken unless the adoption becomes final. For domestic adoptions when you can take the expenses: Expenses paid any year before the year of adoption - take expenses the year after the year of the payment Expenses paid the year the adoption becomes final - take expenses the year the adoption is final Expenses paid any year after the year the adoption becomes final - take expenses the year of payment Employer-provided benefits under an adoption assistance program in any year - take the exclusion in the year of payment A taxpayer who adopts a child with Special Needs has special rules. If you are a taxpayer adopting a child with special needs please call our office for more information.

Alternative Minimum Tax (AMT)

Alternative Minimum Tax Exemption for Individuals is $85,700 for Single or HOH, $133,300 for MFJ or QW, $66,650 for MFS. Phaseout of AMT starts at $609,350 for individuals and $1,218,700 for MFJ

Charitable Contributions

Charitable Cash Contributions must be substantiated. Use check or credit card to create a record. Ask your church for a year-end record showing all donations. Also request receipts from any organization that you donate cash to. If you give cash “ASK FOR A RECEIPT”. Under a IRA audit receipts will be required and they will disallow any deduction that you cannot provide a record for. The receipt should contain the organization’s name, address, amount donated and if they are a qualified charitable organization. Clothing and other items donated must be in “good” condition or better to be deductible. We suggest if you are donating items that have a current market value of over $500.00 that you take pictures and retain them for your records. Automobiles - a very hot topic for the IRS. Our recommendation is that you sell your vehicle and donate the cash if you want to give to the charity. Otherwise there are very strict rules on the donation of a vehicle. You must have a receipt - there are no exceptions. CLICK HERE for Fair Market Valuation guide

Worthless Securities

Stock, stock rights and bonds that became worthless during the year are treated as if they were sold on the last day of the year. CAUTION: While these losses offet capital gains the overall loss for the year cannot exceed $3,000. If they do anything over that it will carry forward. Different rules apply to stock in a corporation affiliated with the taxpayer.